Why is it difficult to replace dollar trading in any other global currency?

by **Rocky** Mon 30 Apr 2018, 4:04 pm

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Why is it difficult to replace dollar trading in any other global currency?

by Rocky Mon 30 Apr 2018, 4:04 pm

Why is it difficult to replace dollar trading in any other global currency?

30/4/2018 12:00 am

[rtl]Sabah al-Hashemi
Many citizens wonder about the possibility of replacing the dollar in monetary transactions and "Is it possible to dispense with the green card in the global monetary system?" Global reports and expert opinions indicate that it is difficult to replace the dollar in any other currency because this would create imbalances In the global currency market as well as 85 percent of world trade based on the dollar, as well as issuing 39 percent of global debt using the US currency.
For several years, the US dollar is the strongest currency in the world, and is officially approved by the central banks in their cash reserves, along with the gold metal finally denominated in dollars.
The green paper's acquisition of that position for years without a real competitor made it difficult to have a strong alternative, although the US dollar reserves fell to a four-year low in the fourth quarter of last year.
The academic economist d. Issam Mohammed described in an earlier statement to "Sabah" linking Iraqi foreign trade to the dollar as a matter of benefit to the economy and achieve stability as it is consistent with the global trend in general.
And "the difficulty of replacing foreign trade in another currency because it will create imbalance in the global currency market in terms of increased demand for a particular currency without others."
"The dollar culture of the region in general makes it difficult to deal with the euro rather than the dollar," said Abdel-Zahra Mohammed, an economist.
"Among these reasons is that the US currency is global and long-standing and has been dealt with for a long time, which highlights the dominance of the dollar on the rest of the other currencies, such as euros, for example, although it is a recognized global currency, but it is a modern currency." How does the dollar prevail?

The dependence on the dollar does not come as the main reserve currency in the countries of the world due to the status of the American economy of the global economy, because in this perspective the US currency will lose in competition; because since the Second World War, the US share in global GDP declined from About 30 percent to 18 percent, surpassing China's share by only 2 percent, and the share of emerging markets in global GDP rose from 40 to 60 percent.
Despite all that, the global financial policy has not changed in line with these developments and the dollar has maintained its status because of Bretton Woods. Bretton Woods and Bretton Woods is a historic agreement on cash exchange rate management, and the name of the agreement was attributed to the place where it was held in 1944, whereby the US dollar became the currency of the world's cash reserve and linked to the price of gold.

Under the agreement, central banks will maintain fixed exchange rates between their currencies and the dollar, while the US will replace the US dollar with gold on demand.
The system continued until August 15, 1971, when US President Richard Nixon declared a halt to the replacement of the dollar with gold, the most important element of the Bretton Woods system.
Then, in 1973, foreign governments allowed the currency to float, putting an end to the Bretton Woods system.
Until the 1970s, about two-thirds of world GDP was based on the dollar, and the rest was largely divided between the British pound and the Soviet ruble. The reason for the dollar's strength

Several reasons have led the dollar to remain on the list of the most powerful currency of the year, apart from the size and strength of the US economy, including that more than a third of the world's GDP comes from countries that link their currencies to the green card.
In the foreign exchange market more than 85 percent of that trade is based on the dollar, and 39 percent of the world's debt is issued using the US currency.
Iqbal countries to keep the dollar in their reserves and acquisition of the first place in this regard, evidence of the strength of the US currency, as well as its use in international transactions.
Most of the world commodity contracts are denominated in US dollars, especially oil and gold, which are the most important global commodities, making the transactions of these commodities using green paper.
The US currency has always been able to overcome its pitfalls during the 1970s and 1980s, and from 1991 to 1993.
Although everyone was betting on the collapse of the dollar, many governments thought to end the peg in the US currency, Stronger than the first. Are there competitors? In March 2009, China and Russia called for a new global currency that would become the currency of the world's reserve currency, independent and non-volatile, as well as removing the shortcomings resulting from the use of national currencies linked to credit. China has already called on the International Monetary Fund (IMF) to do so as a result of concerns that its trillions in US currency would become less valuable as a result of the US spending deficit and the issuance of US Treasury bonds to support debt.

Some countries have also tended to keep currencies other than the dollar in their cash reserves, with yen holding in state reserves rising to the highest level since 2002 at 4.89 percent in the fourth quarter of last year.
The Chinese yuan was also included in the reserve currencies of the countries in the fourth quarter of 2016, and the total holdings of countries from the Chinese currency to 1.23 percent in the fourth quarter of 2017, compared to 1.12 percent in the previous quarter.
As the yuan entered the IMF's Special Drawing Rights (SDR) currencies, many said it could replace the dollar as the world's top currency, but the fact that it has been less frequent in Chinese trade and rules on exchange has played down that belief.
The Central Bank of China rules to set a reference rate for the yuan daily and only allows a margin of rise or fall of 2 percent of this level.[/rtl]

[rtl]http://www.alsabaah.iq/ArticleShow.aspx?ID=156384
[/rtl]

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Established in 2006 as a Community of Reality

Why is it difficult to replace dollar trading in any other global currency?

Why is it difficult to replace dollar trading in any other global currency?

Why is it difficult to replace dollar trading in any other global currency?

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